While turbulent during the best of times, gigantic waves of change are now sweeping across the Middle East. The magnitude is such that the impact on the global price of oil, as well as world markets, is likely to be enormous.

A dramatic geo-political realignment by Saudi Arabia is in full swing this month. It’s upending many decades of established strategic relationships among the world's superpowers and, in particular, is throwing the Middle East into turmoil.

So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.

A shift away from the US in all respects (politically, financially and militarily)

Deepening ties to China

A surprising turn towards Russia (economically and militarily)

Increasing cooperation and alignment with Israel (the enemy of my enemy is my friend?)

Taken together, this is tectonic change happening at blazing speed.

That it's receiving too little attention in the US press given the implications, is a tip off as to just how big a deal this is -- as we're all familiar by now with how the greater the actual relevance and importance of a development, the less press coverage it receives. This is not a direct conspiracy; it's just what happens when your press becomes an organ of the state and other powerful interests. Like a dog trained with daily rewards and punishments, after a while the press needs no further instruction on the house rules.

It does emphasize, however, that to be accurately informed about what's going on, we have to do our own homework. Here's a short primer to help get you started.

A Quick Primer

Unless you study it intensively, Saudi politics are difficult to follow because they are rooted in the drama of a very large and dysfunctional family battling over its immense wealth. If you think your own family is nuts, multiply the crazy factor by 1,000, sprinkle in a willingness to kill any family members who get in your way, and you'll have the right perspective for grasping how Saudi 'politics' operate.

The House of Saud is the ruling royal family of the Kingdom of Saudi Arabia (hereafter referred to as "KSA") and consists of some 15,000 members. The majority of the power and wealth is concentrated in the hands of roughly 2,000 individuals. 4,000 male princes are in the mix, plus a larger number of involved females -- all trying to either hang on to or climb up a constantly-shifting mountain of power.

Here's a handy chart to explain the lineage of power in KSA over the decades:

We’ll get to the current ruler, King Salman, and his powerful son, Mohammed Bin Salman (age 32), shortly. Before we do, though, let’s talk about the most seminal moment in recent Saudi history: the key oil-for-money-and-protection deal struck between the Nixon administration and King Faisal back in the early 1970’s.

This pivotal agreement allowed KSA to secretly recycle its surplus petrodollars back into US Treasuries while receiving US military protection in exchange. The secret was kept for 41 years, only recently revealed in 2016 due to a Bloomberg FOIA request:

The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending.

It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the country’s Treasury purchases stay “strictly secret,” according to a diplomatic cable obtained by Bloomberg from the National Archives database.

“Buying bonds and all that was a strategy to recycle petrodollars back into the U.S.,” said David Ottaway, a Middle East fellow at the Woodrow Wilson International Center in Washington. But politically, “it’s always been an ambiguous, constrained relationship.”

The essence of this deal is pretty simple. KSA wanted to be able to sell its oil to its then largest buyer, the USA, while also having a safe place to park the funds, plus receive military protection to boot. But it didn’t want anybody else, especially its Arab neighbors, to know that it was partnering so intimately with the US who, in turn, would be supporting Israel. That would have been politically incendiary in the Middle East region, coming as it did right on the heels of the Yom Kipper War (1973).

As for the US, it got the oil it wanted and – double bonus time here – got KSA to recycle the very same dollars used to buy that oil back into Treasuries and contracts for US military equipment and training.

Sweet deal.

Note that this is yet another secret world-shaping deal successfully kept out of the media for over four decades. Yes Virginia, conspiracies do happen. Secrets can be (and are routinely) kept by hundreds, even thousands, of people over long stretches of time.

Since that key deal was struck back in the early 1970s, the KSA has remained a steadfast supporter of the US and vice versa. In return, the US has never said anything substantive about KSA’s alleged involvement in 9/11 or its grotesque human and women’s rights violations. Not a peep.

Until recently.

Then Things Started To Break Down

In 2015, King Salman came to power. Things began to change pretty quickly, especially once he elevated his son Mohammed bin Salman (MBS) to a position of greater power.

Among MBS's first acts was to directly involve KSA into the Yemen civil war, with both troops on the ground and aerial bombings. That war has killed thousands of civilians while creating a humanitarian crisis that includes the largest modern-day outbreak of cholera, which is decimating highly populated areas. The conflct, which is considered a 'proxy war' because Iran is backing the Houthi rebels while KSA is backing the Yemeni government, continues to this day.

Then in 2016, KSA threatened to dump its $750 billion in (stated) US assets in response to a bill in Congress that would have released sensitive information implicating Saudi Arabia's involvement in 9/11. Then-president Obama had to fly over there to smooth things out. It seems the job he did was insufficient; because KSA-US relations unraveled at an accelerating pace afterwards. Mission NOT accomplished, it would seem.

In 2017, KSA accused Qatar of nefarious acts and made such extraordinary demands that an outbreak of war nearly broke out over the dispute., The Qatari leadership later accused KSA of fomenting ‘regime change’, souring the situation further. Again, Iran backed the Qatar government, which turned this conflict into another proxy battle between the two main Gulf region superpowers.

In parallel with all this, KSA was also supporting the mercenaries (aka "rebels" in western press) who were seeking to overthrow Assad in Syria -- yet another proxy war between KSA and Iran. It's been an open secret that, during this conflict, KSA has been providing support to some seriously bad terrorist organizations like Al-Qaeda, ISIS and other supposed enemies of the US/NATO. (Again, the US has never said 'boo' about that, proving that US rhetoric against "terrorists" is a fickle construct of political convenience, not a moral matter.)

Once Russia entered the war on the side of Syria's legitimate government, the US and KSA (and Israel) lost their momentum. Their dreams of toppling Assad and turning Syria into another failed petro-state like they did with Iraq and Libya are not likely to pan out as hoped.

But rather than retreat to lick their wounds, KSA's King Salman and his son are proving to be a lot nimbler than their predecessors.

Rather than continue a losing battle in Syria, they've instead turned their energies and attention to dramatically reshaping KSA's internal power structures:

Saudi Arabia’s Saturday Night Massacre

For nearly a century, Saudi Arabia has been ruled by the elders of a royal family that now finds itself effectively controlled by a 32-year-old crown prince, Mohammad bin Salman. He helms the Defense Ministry, he has extravagant plans for economic development, and last week arranged for the arrest of some of the most powerful ministers and princes in the country.

A day before the arrests were announced, Houthi tribesmen in Yemen but allied with Iran, Saudi Arabia’s regional rival, fired a ballistic missile at Riyadh.

The Saudis claim the missile came from Iran and that its firing might be considered “an act of war.”

Saudi Arabia was created between the two world wars under British guidance. In the 1920s, a tribe known as the Sauds defeated the Hashemites, effectively annexing the exterior parts of Saudi Arabia they did not yet control. The United Kingdom recognized the Sauds’ claim shortly thereafter. But since then, the Saudi tribe has been torn by ambition, resentment and intrigue. The Saudi royal family has more in common with the Corleones than with a Norman Rockwell painting.

The direct attack was undoubtedly met with threats of a coup. Whether one was actually planned didn’t matter. Mohammed Bin Salman had to assume these threats were credible since so many interests were under attack. So he struck first, arresting princes and ex-minsters who constituted the Saudi elite. It was a dangerous gamble. A powerful opposition still exists, but he had no choice but to act. He could either strike as he did last Saturday night, or allow his enemies to choose the time and place of that attack. Nothing is secure yet, but with this strike, there is a chance he might have bought time. Any Saudi who would take on princes and clerics is obviously desperate, but he may well break the hold of the financial and religious elite.

This 32 year-old prince, Mohammed bin Salman has struck first and deep, completely upending the internal power dynamics of Saudi Arabia.

He's taken on the political, financial and religious elites head on. For example, pushing through the decision to allow women to drive; a provocative move designed to send a clear message to the clerics who might oppose him. That message is: "I'm not fooling around here."

This is a classic example of how one goes about purging the opposition when either taking over a government after a coup, or implementing a big new strategy at a major corporation. You have to remove any possible opponents and then install your own loyalists. According the Rules for Rulers, you do this by diverting a portion of the flow of funds to your new backers while diminishing, imprisoning or killing all potential enemies.

So far, Mohammed bin Salman's action plan is par for the course. No surprises.

The above article from Stratfor (well worth reading in its entirety) continues with these interesting insights:

The Iranians have been doing well since the nuclear deal was signed in 2015. They have become the dominant political force in Iraq. Their support for the Bashar Assad regime in Syria may not have been enough to save him, but Iran was on what appears to be the winning side in the Syrian civil war. Hezbollah has been hurt by its participation in the war but is reviving, carrying Iranian influence in Lebanon at a time when Lebanon is in crisis after the resignation of its prime minister last week.

The Saudis, on the other hand, aren’t doing as well. The Saudi-built anti-Houthi coalition in Yemen has failed to break the Houthi-led opposition. And Iran has openly entered into an alliance with Qatar against the wishes of the Saudis and their ally, the United Arab Emirates.

Iran seems to sense the possibility of achieving a dream: destabilizing Saudi Arabia, ending its ability to support anti-Iranian forces, and breaking the power of the Sunni Wahhabis. Iran must look at the arrests in Saudi Arabia as a very bad move. And they may be. Mohammad bin Salman has backed the fundamentalists and the financial elite against the wall.

They are desperate, and now it is their turn to roll the dice. If they fall short, it could result in a civil war in Saudi Arabia. If Iran can hit Riyadh with missiles, the crown prince’s opponents could argue that the young prince is so busy with his plans that he isn’t paying attention to the real threat. For the Iranians, the best outcome is to have no one come out on top.

This would reconfigure the geopolitics of the Middle East, and since the U.S. is deeply involved there, it has decisions to make.

So given Yemen, Syria, and its recent domestic purges, Saudi Arabia is in turmoil. It's in a far weaker position than it was a short while ago.

This leaves the US in a far weaker regional position, too, at precisely the time when China and Russia are increasing their own presence (which we’ll get to next).

But first we have to discuss what might happen if a civil war were to engulf Saudi Arabia. The price of oil would undoubtedly spike. In turn, that would cripple the weaker countries, companies and households around the world that simply cannot afford a higher oil price. And there's a lot of them.

Financial markets would destabilize as long-suppressed volatility would explode higher, creating horrific losses across the board. That very few investors are mentally or financially prepared for such carnage is a massive understatement.

So..if you were Saudi Arabia, in need of helpful allies after being bogged down in an unwinnable war in Yemen, just defeated in a proxy war in Syria, and your longtime 'ally', the US, is busy pumping as much of its own oil as it can, what would you do?

Pivot To China

Given its situation, is it really any surprise that King Salman and his son have decided to pivot to China? In need of a new partner that would align better with their current and future interests, China is the obvious first choice.

So in March 2017, only a very short while after Obama's failed visit, a large and well-prepared KSA entourage accompanied King Salman to Beijing and inked tens of billions in new business deals:

China, Saudi Arabia eye $65 billion in deals as king visits

Mar 16, 2017

BEIJING (Reuters) - Saudi Arabia’s King Salman oversaw the signing of deals worth as much as $65 billion on the first day of a visit to Beijing on Thursday, as the world’s largest oil exporter looks to cement ties with the world’s second-largest economy.

The deals included a memorandum of understanding (MoU) between giant state oil firm Saudi Aramco and China North Industries Group Corp (Norinco), to look into building refining and chemical plants in China.

Saudi Basic Industries Corp (SABIC) and Sinopec, which already jointly run a chemical complex in Tinajin, also agreed to develop petrochemical projects in both China and Saudi Arabia.

Salman told Xi he hoped China could play an even greater role in Middle East affairs, the ministry added.

Deputy Chinese Foreign Minister Zhang Ming said the memorandums of understanding and letters of intent were potentially worth about $65 billion, involving everything from energy to space.

This was a very big deal in terms of Middle East geopolitics. It shook up many decades of established power, resulting in a shift away from dependence on America.

The Saudis arrived in China with such a huge crowd in tow that a reported 150 cooks had been brought along to just to feed everyone in the Saudi visitation party.

The resulting deals struck involved everything from energy to infrastructure to information technology to space. And this was just on the first visit. Quite often a brand new trade delegation event involves posturing and bluffing and feeling each other out; not deals being struck. So it’s clear that before the visit, well before, lots and lots of deals were being negotiated and terms agreed to so that the thick MOU files were ready to sign during the actual visit.

The scope and size of these business deals are eye catching, but the real clincher is King Salman's public statement expressing hope China will play "an even greater role in Middle East affairs."

That, right there, is the sound of the geopolitical axis-tilting. That public statement tells us everything we need to know about the sort of change the Salman dynasty intends to pursue.

So it should have surprised no one to hear that, in August this year, another$70 billion of new deals were announced between China and KSA. The fanfare extolled that Saudi-Sino relations had entered a new era, with “the agreements covering investment, trade, energy, postal service, communications, and media.”

This is a very rapid pace for such large deals. If KSA and China were dating, they’d be talking about moving in together already. They're clearly at the selecting furniture and carpet samples stage.

As for the US? It seems KSA isn't even returning its calls or texts at this point.

You Ain't Seen Nothing Yet...

All of the above merely describes how we arrived at where things stand today.

But as mentioned, the power grab underway in KSA by Mohammed bin Salman is unfolding in real-time. Developments are happening hourly -- while writing this, the very high-profile Prince Bandar bin Sultan (recent head of Saudi Intelligence and former longtime ambassador to the US) has been arrested.

The trajectory of events is headed in a direction that may well end the arrangement that has served as the axis around which geopolitics has spun for the past 40 years. The Saudis want new partners, and are courting China hard.

China, for reasons we discuss in Part 2 of this report, has an existential need to supplant America as Saudi Arabia's most vital oil customer.

And both Saudi Arabia and China are inking an increasing number of strategic oil deals with Russia. Why? We get into that in Part 2, too -- but suffice it to say, in the fast-shifting world of KSA foreign policy, it's China and Russia 'in', US 'out'.

Maybe not all the way out, but the US clearly has lost a lot of ground with KSA over the past few years. My analysis is that by funding an insane amount of shale oil development, at a loss, and at any cost (such as to our biggest Mideast ally) the US has time and again displayed that our ‘friendship’ does not run very deep. In a world where loyalty counts, the US has proved a disloyal partner. Can China position itself to be perceived of as a better mate? When it comes to business, I believe the answer is ‘yes.’

In Part 2: The Oil Threat we couple these developments with China and Russia’s recent efforts to drop the dollar from trade, especially when purchasing oil, and clearly see the unfolding of the biggest new driver of the world’s financial, monetary and geopolitical arrangements in 50 years.

We also explain why, unless something very dramatically changes in either the supply or demand equation for oil, and soon, we can now put a timeline in place for when the great unraveling begins. Somewhere between the second half of 2018 and the end of 2019 oil will dramatically increase in price and that will shake the foundations of the global mountain of debt and its related underfunded liabilities. Think 9.0 on the financial Richter scale.

Let me be blunt - you have to have your preparations done before this happens. You really, really want to be a year early on this (at least). When it starts happening, the breakdown will progress faster than you can react.

Join the discussion

34 Comments

Very informative article you have written and quite serious matters you have outlined. I thank you for writing it at this point in time but I was shocked to see you refer to Iran as an Arab state when you wrote about the "battle between the two main regional Arab superpowers".

Iran is not an Arab state and to name it so is a grave mistake in an article that is covering the intricacies of these conflicts. I am sure it was unintentional and it should not affect the objective of the article.

[Admin: very good catch, Farhad. We've corrected the reference in the article above]

Chris, thanks for tackling a complex, nuanced topic that is additionally burdened by layers of opacity and secrecy. As a sidebar to Farhad's comment, the Persian Empire (Iran's history) was a contemporary of Rome and extended influence/hegemony all the way to India at various points. Iran's history, culture and trajectory predates Islam by a millennium. In my own non-expert view, Iran shares traits with China, i.e. being an ancient culture that views itself as a natural Regional/Global Power. Iran is highly complex and has its own internal social/economic tensions. The regional complexities are off the charts.

One possibility is that China and Russia will copy some of our mistakes in the Middle East. I'm actually looking forward to the entertainment value of watching them flounder around in the ME trying to figure who is their friend and who is their enemy TODAY, and watching them spend money and blood to force some efficiency and sanity into that region. I can't wait to see Xi and Putin performing shuttle diplomacy between ME capitals. I hope we will be watching from our sidelines like they snickered at us from their sidelines. They can have it. I'm all for avoiding the "foreign entanglements" Jefferson warned us about and which have been slowly bleeding us to death the last 60 years.

Another possibility is that China and Russia will succeed where we failed. Maybe they'll usher in a golden age of peace and prosperity in the ME which will benefit them and the whole world. Wouldn't that be great? I'm not holding my breath, though. We should all keep in mind that while China and Russia are pivoting toward Saudi Arabia they already have relationships with Iran (not to mention Syria and Iraq). Are they going to MAKE/FORCE Iran and Saudi to play nice together? Or will things spin out of their control when their new "allies" start fighting with each other?

Furthermore, I agree with the principle often spoken of here: The longer our system staggers on in the direction it's been going, the bigger and more destructive our crash is going to be when it comes. I'd like to quit making the inevitable crash any bigger and just get on with it at this level. The sooner we crash and burn the sooner we can get started building something better, and before we've made it any worse than it already is. Sooo, maybe all these Middle Eastern intrigues, dilemmas and predicaments will ignite the crash. I can see the value in that.

In the ongoing fighting with ISIS I have never once heard an outcry from Israel. Isn't it odd that a caliphate was declared right next door to Israel and not a peep was heard? You would think that Israel would have been screaming bloody murder about having an aggressive and volatile enemy so close to their borders. Am I missing something?

Very well done, Chris. One of your more cogent pieces of commentary. The world is changing and the baby-boomer generation's influence is waning. Perhaps the environmental imperatives are capturing the honest attention of the next "turning". Cheap energy, in the past, has led to our "squanderous" ways and, I would like to think, the next generations are calling us on it. Hopefully for the better. Of course, human nature is the wild card. Wouldn't it be great to think that cooperation will trump competition in the new world order?

...to a world tuned to the idea of "Less." It actually might prove to be the human race's salvation.

I'm going to give my car it's weekly $25 of gas later today. Beyond that, I won't be spending a dime in the next 24 hours. But my son and I will get some recreation at the beach, then we will have dinner w/some friends. Food, music, talk story. No devices or internet required. Heck, no *electricity* required. Just people. Being people.

One man's idea of paradise...

VIVA -- Sager

NB: excellent write up of the whole situation -- the developments of which had been bugging me since last weekend...

So I read this and appreciate the analysis. I would expect this is going to be something that Chris stays focused on for a while, which is good. For me, the most important part of this is the time line and CM's crystal ball. Just having another reminder to check the preps, to make sure I am working toward a better future....those are always helpful. Thanks Chris.

Aloha! Okay the Chinese are in the middle east. Not news. They have been there a long time. In 1970 I was in Tehran visiting. The airport was full of Mao Chinese in their black uniforms all toting Mao's Little Red Book! So many in the airport I thought I landed in Shanghai instead!

Check out this 1970s nuclear ad when the Shah was in power. So he knew the oil would not last forever and now we know historically nuclear was in the middle east a long time ago.

So the Chinese are in Iran and Saudi Arabia. Sounds like they found a copy of the Rothchild's Bible ... play on both sides!

So then I panned through two cell-phone pages of entries, looking for more. What I found was oblique references to the slaughter of Gavriel and Rivka Holtzberg, and how the granparents are raising the kids. So from there, I went to wikipedia:

Stratfor for your source. Might as well ask the Neocons directly: Cohens, Rumsfeld, Wolfowitz... Why do we need another war? I loved your last 16 years of wars!

Actually it looks like the article is not from Stratfor, but Geopolitical Futures which is the new company created by the previous head of Stratfor, George Friedman (FYI Chris you might want to correct that in the article). But regardless, I do understand your hesitance with either Stratfor or Friedman's new company. Much of their analysis has traditionally been given in the context of the US being the "unintentional empire" and a necessary global force for stability, which IMO is off the mark. Maybe that's really the way they see things, or maybe it's the 'spin' they deliver their analysis in to cater to the political and military types who make up a fair part of their subscriber base (or maybe some of both). Though that context doesn't seem to be pushed as much in Stratfor articles & podcasts I've read/listened to in recent years; maybe due to the change in management.

That all being said, the analyses and articles of either one often DO have worthwhile information... but as with all information, you have to look at it while keeping the writer's worldview (and possible agenda) in mind as you read it. A BS filter, if you will (or 'bias filter' if you want to be diplomatic about it). The takeaway is if you want a better picture of what's going on, don't reject information out of hand solely because you don't like the source or their politics. And FYI, no I do not pay for their subscription (I just read the free content available), so I have no relationship with them. This site is the only 'information scouting' service I've subscribed to.... which I will eventually start up again once our business endeavors here start actually making us some money ;-)

Excellent and informative, and worrying, article. Re: the 761K hits- read the headline: "You should be worried" (paraphrase). That gets peoples' attention. Didn't we learn that in a previous article on propaganda techniques? That being said, I'd wager Chris' articles are always highly valued over there....Aloha, Steve.

Goal 7. Ensure access to affordable, reliable, sustainable and modern energy for all 7.1 By 2030, ensure universal access to affordable, reliable and modern energy services
7.2 By 2030, increase substantially the share of renewable energy in the global energy mix
7.3 By 2030, double the global rate of improvement in energy efficiency
7.a By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology
7.b By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries, in particular least developed countries, small island developing States, and land-locked developing countries, in accordance with their respective programmes of support

Just a wild guess on my part, but I'm thinking we'll be using coal again at some point. My local fireplace supply store started selling bagged pea coal last year. Imagine the price discovery that will ensue when everyone decides they need a wood or coal stove.

Because in an effort to achieve what they sometimes call the "global economic reset," or the "new world order," a more publicly accepted centralized global economy and monetary framework is paramount. And, this means the eventual implementation of a single world currency and a single global economic and political authority above and beyond the dollar system.

But, it is not enough to simply initiate such socially and fiscally painful changes in a vacuum. The banking powers are not interested in taking any blame for the suffering that would be dealt to the masses during the inevitable upheaval (or blame for the suffering that has already been caused). Therefore, a believable narrative must be crafted. A narrative in which political intrigue and geopolitical crisis make the "new world order" a NECESSITY; one that the general public would accept or even demand as a solution to existing instability and disaster.

That is to say, the globalists must fashion a propaganda story to be used in the future, in which "selfish" nation-states abused their sovereignty and created conditions for calamity, and the only solution was to end that sovereignty and place all power into the hands of a select few "wise and benevolent men" for the greater good of the world.

I believe the next phase of the global economic reset will begin in part with the breaking of petrodollar dominance. An important element of my analysis on the strategic shift away from the petrodollar has been the symbiosis between the U.S. and Saudi Arabia. Saudi Arabia has been the single most important key to the dollar remaining as the petrocurrency from the very beginning...

I believe that major powers like the U.S. and Russia will probably not become involved in a wider sense, but continue to insert covert forces into the region and support opposing nations through funding and armaments. As with North Korea, I would not expect "world war" on the scale of a nuclear conflagration to develop in the Middle East.

What I do expect is something far more devastating - namely an accelerated disintegration of our already collapsing economic structure as war plays out abroad and the loss of the dollar's world reserve and petro-status hits us hard at home. So far, in my view it appears that the insanity in Saudi Arabia, (along with the continued war drums against North Korea), is a perfect trigger point that provides a catalyst for mass distraction.

World economic war is the real name of the game here, as the globalists play puppeteers to East and West. It is a geopolitical crisis they will have created to engineer public support for a solution they predetermined.

Of course, there's complexity here that, for some reason, the IEA is busy de-clarifying as much as it can.

"Oilandgas" as if it were one word. Just lump it all together and pretend that's meaningful. It's not. These are completely different fuels with entirely different uses. By lumping them together the IEA reveals it has an agenda, and that includes muddying the waters.

Next, the IEA has US shale oil production just ramping, and ramping some more, until 2025 and then it just hangs there, Wiley e. Coyote like for decades.

The reality is that as soon as you stop drilling, or run out of drill room, or even just slow down drilling (as is the case for the chart below) this is what happens:

This isn't some cheesy shale basin I selected to make a point, this is the second most productive in the land. The Permian (#1) has more room to run because it's possibly the best such basin in the world, but we're already seeing big declines in the second (Eagleford) and third (Bakken) best.

So what the IEA is really saying is that their production models for US shale have essentially unlimited drill spots for the next 10 to 20 years and an accelerating drill schedule.

Remember, as soon as you simply flatten out your drill program, you get a decline like we see for the Eagleford above.

Maybe the IEA has it right, but that's a big stretch based on the data we currently have. I can't see it without a huge increase in the price of oil that does not also come along with a huge increase in drill costs AND we have abundant and cheap capital the whole way along.

If or when there's a reckoning in the Junk debt space, and/or a concomitant rise in interest costs, there are a crap-ton of shale producers that simply will not persist. I'm sure their assets will be picked up and produced by more sound companies, but not at the accelerating breakneck pace assumed by the IEA.

Thanks for the succinct breakdown of the problems with the report. I was thinking along similar lines, but it's good to have your feedback and charts on hand when I give my presentation to the faculty here at my school, since I am sure someone will bring it up if they want to try to shoot holes in my data.

Here are the "interest" flyers I'm putting in everyone's mailboxes, by the way:

syndeman --- love your marketing colateral! , good job... and i'm stunned/amazed that you can do it in a "20 minute presentation"!!!, do you record these? or have notes you can post? -- either way best of luck awakening your sphere of influence

As your guest Arthur Berman said: it's just a retirement party. Hasn't the industry known about these " great sources" forever and left them alone because there such an expensive pain in the frack?. Hence Chris' constant point that these companies are bleeding cash and , like vampires, constantly looking for new blood.

Rumor has it that gas production increases when the oil starts to run low.

As in, more gas coming out of the actual wells (i.e. a physical phenomenon) or O&G companies starting to produce more gas, since they can't meet their numbers from oil alone (i.e. an economic phenomenon). I have, of course, heard about the "running on fumes" concept in terms of cars running out of fuel before, but it would be news to me if this was applicable to oil wells as well.

There are no oil stocks in the USA. They all have huge weightings of natural gas and natural gas liquids—which are worth a lot less than oil. (I have the two highest US weightings in my subscriber portfolio.) The actual realized price per barrel of oil equivalent (whic includes the natgas & NGLs) for US E&Ps is MUCH less than the WTI price.

And what’s more—the older that most US wells get, the more gas they produce compared to oil; in other words the gas-oil ratio increases. See this chart fromwww.shaleprofile.com on the mighty Permian—it gets gassy very quickly:

Fame is no guarantee the evil one won't catch up. I cannot help but feel sorry for the princes though they care not a whit about me. Don't know about the mercenaries doing the dirty work but who knows.

Saudi authorities have arrested Mohammed Hussein Al-Amoudi a duel national with Saudi and Ethiopian citizen and is reportedly the second richest Saudi, after Prince Al-Waleed bin Talal.

While bin Talal’s arrest has gained most media attention. Al-Amoudi’s arrest is especially important because it could potentially destabilize the economy of an entire country, according to Middle East Eye.

Al-Amoudi, who is also known as “the Sheikh”, has invested in almost every sector of Ethiopia’s economy, including hotels, agriculture and astrology.

According to a leaked diplomatic cable from 2008 “the Sheikh’s influence on the Ethiopian economy cannot be underestimated.”

In the nearly ten years a since then it has become even harder to estimate the exact value of Al-Amoudi’s total investment in Ethiopia, which is among the fastest developing countries in Africa. One analyst estimated the value of the Sheikh’s investment at $3.4 billion, which represents 4.7 per cent of Ethiopia’s current GDP.

Saudi Arabia’s powerful Crown Prince called the Supreme Leader of Iran “the new Hitler of the Middle East” in an interview with The New York Times published on Thursday, sharply escalating the war of words between the arch-rivals. The Sunni Muslim kingdom of Saudi Arabia and Shi‘ite Iran back rival sides in wars and political crises throughout the region.

Mohammed bin Salman, who is also Saudi defense minister in the U.S.-allied oil giant kingdom, suggested the Islamic Republic’s alleged expansion under Ayatollah Ali Khamenei needed to be confronted.

“But we learned from Europe that appeasement doesn’t work. We don’t want the new Hitler in Iran to repeat what happened in Europe in the Middle East,” the paper quoted him as saying.

Not in his oratory style but his level headed approach to his genocide. If he keeps going his numbers may match (25 million for Stalin). Anything that has been done to assist him sickens me to the core. The irony of his invoking Godwin's law. And he is young, healthy and has many years ahead of him it seems. And now more money than I can imagine. This monster keeps me up at night. What will he being doing next??? (sorry editorial comment not lots of content but at a loss for how to even respond to these events)